Budget Cutters Are Told To Go Easy

The State's $1 Billion Deficit Because Of Increasing Health Costs Brought A Plea To Act With Care.

December 29, 2000|By MARK HOLLIS, TALLAHASSEE BUREAU

TALLAHASSEE -- Florida is set to begin a new year facing the sobering news of a $1 billion hole in the state budget.

But some government watchdogs say officials should not deal with the budget crunch as if it were a catastrophe.

"Crash dieting can wreak havoc on your health as well as on the state budget," Dominic Calabro, president of Florida TaxWatch, said Thursday. "The Florida Legislature's Number 1 New Year's resolution should be responsible, cost-effective reductions."

After two years of record-high spending and tax breaks, Gov. Jeb Bush and the Florida Legislature are poised to slash government spending and to eliminate potentially thousands of state jobs in order to balance the budget. And to the dismay of some Democrats, Republican leaders appear to be pushing ahead with another $350 million in tax cuts that mainly help businesses and the wealthy.

"I think we've seen this drumbeat of budget crisis get louder and louder and louder," said Bob Poe, chairman of the Florida Democratic Party. "It should be of grave concern."

At the center of the budget dilemma is the largest shortfall in the history of the Medicaid program, the program that provides health care to the poor and some elderly.

Increases in the cost of prescription drugs and the number of children eligible for health services have led to a predicted $978 million shortfall in the $8 billion Medicaid program.

The current state budget is $50.9 billion. Economic forecasts show that Florida will get an additional $1.9 billion in new money because of economic growth. But that's only half as much new money as the state received this year.

Calabro predicts the new money will be absorbed by the Medicaid cost increases and tax-relief proposals that were approved in previous years and Republican lawmakers favor continuing. The proposals include at least $250 million to phase out the state's intangibles tax on investors' stocks and bonds, $50 million to end an alcoholic-drink tax, and another $35 million to continue the annual summer "holiday"' from the state's sales tax on certain back-to-school clothing purchases.

The state faces expenses that have no clear source of money to pay them. Public schools will see a 6 percent growth in enrollment, requiring an additional $400 million. The state needs $200 million for a new road-building initiative called Mobility 2000. And it must come up with $200 million for Everglades restoration.

Despite the budget squeeze, Calabro said the tax relief plans are necessary to keep industry interested in doing business in Florida.

"It's absolutely desirable, and quite frankly, critically necessary," Calabro said of the tax cuts, insisting that the state should deal with the budget crisis by slowing the growth of government programs.

Some Democrats are concerned about the tax cut and privatization efforts.

"Even if we don't have an economic downturn, we have placed ourselves in a position, by these tax giveaways, of not being able to withstand even any hiccup in the economy," said Poe, the Democratic Party head. "We had nearly $1.5 billion dollars in tobacco-settlement money that the Republicans just chose to give away, and not to the average taxpayer."

Poe said the money should have been spent on rainy-day funds or government programs rather than tax cuts that benefited businesses and wealthy individuals.